The Department of Housing and Urban Development has requested public comment on proposed policy changes designed to reduce the risk of loans insured by the Federal Housing Administration.

FHA Commissioner David Stevens had first described the changes in January. Comments on the proposal, which was published in the Federal Register Thursday, are due Aug. 15.

Borrowers with credit scores of less than 580 will be required to make a minimum 10% down payment, while those with scores of less than 500 will no longer qualify for an FHA-insured mortgage. Maximum home-seller concessions will be reduced to 3% of the purchase price of a home, from 6%. Lenders also will be required to consider the borrower's credit history, loan-to-value percentage, debt-to-income ratio and cash reserves for manually underwritten loans.

The FHA said it also is considering allowing borrowers with high LTV ratios and low credit scores of between 500 and 579 to refinance if their lender agrees to accept a short payoff. That proposal would be "a special, temporary allowance" for refinances through Dec. 31, 2012.

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